In the States and in Washington: The Season of Testing Priorities: First Gramm-Rudman Cuts To Cost E.D. $170.9 Million

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Education Department spending will be cut by $170.9 million this year in the fir t wave of budget reductions resulting from landmark deficit-cutting legislation, federal officials announced last week.

That cut was part of an $11.7 -billion governmentwide spending reduction for this year detailed in a joint report issued by the White House and Congressional budget offices, as mandated by the Gramm-Rudman-Hollings balanced-budget law.

All domestic programs not specifically exempted by the new law will be reduced by 4.3 percent, accounting for half of the $11.7- billion cut; military spending will be slashed by 4.9 percent.

Most education programs will not feel the brunt of the 4.3 percent across-the-board reduction in outlays and budget authority until the 1987-88 school year.

Programs Facing Cuts

Department programs facing the most immediate contraction include impact aid, research, Guaranteed Student Loans, public-library aid, and vocational rehabilitation. (See chart on below.)

Across-the-board reductions in federal spending in fiscal 1987, if required, are expected to be far more than 4.3 percent. ''Today's cuts are like trimming your nails," said Representative Charles E. Schumer, Democrat of New York and member of the House Budget Committee. "What is coming will be like chopping off your hand."

Education Cuts Detailed.

The department's fiscal 1986 budget authority of nearly $18.5 billion- the maximum it is allowed to spend-will be reduced by about $700 million as part of the 4.3-percent cut in domestic programs.

Because most education programs are "forward funded," with fiscal 1986 money actually spent during fiscal 1987, schools will not feel the full impact of these initial cuts until the 1987-88 school year.

The $170.9-million reduction this year, which becomes final March 1, comes out of a planned $3 billion in department outlays for fiscal 1986.

Uniform Reductions

Budgets for all education programs will be reduced uniformly, according to Sally H. Christensen, the department's budget director.

For state-grant programs, such as Chapter 2 block grants, each state's allocation will be reduced by 4.3 percent, she said. In discretionary-grant programs, such as bilingual education, the amount available to competitors will simply be cut by 4.3 percent.

The $5.1-billion budget authority of the department's office of elementary and secondary education will be reduced by $221.9 million.

The $3.7-billion Chapter 1 compensatory-education program will be reduced by $158.9 million; the $173-million bilingual-education program faces a $7.4-million reduction, and special-education funds will be reduced by $60.7 million from their current level of $1.4 billion.

To achieve savings in the Guaranteed Student Loan program, officials will not simply reduce it by 4.3 percent, but will raise the origination fee by .5 percent and cut payment to lenders by .4 percent; these changes will affect loans made between March 1 and Oct. 1 of this year.

The origination fee on the maximum $2,500 loan, for example, will increase by $12.50, from $125 to $137.50, according to Ms. Christensen.

Effect of New Legislation

The Gramm-Rudman-Hollings law, which President Reagan signed last month, establishes maximum legal deficits over the next five years, leading to a balanced budget by 1991.

The Congressional Budget Office and the White House Office of Management and Budget calculated the amount of the reduction needed to cut $11.7 billion in federal spending this year, the maximum reduction the law allowed.

The joint C.B.O. and O.M.B. estimate, which was published in the Jan. 15 Federal Register, must be cleared by the General Accounting I Office Jan. 21 and signed by President Reagan Feb. 1.

1987 Budget Planned

Administration officials are reported to have prepared a fiscal 1987 Education Department budget of about $15 billion that would cut vocational- education spending and slash the higher-education budget but generally maintain other school-aid programs at their new, lower levels.

But if, as analysts now expect, the Congress cannot approve its own budget to meet the $144-billion fiscal 1987 deficit target required by Gramm-Rudman-Hollings, then all programs will again be cut automatically and uniformly.

The cuts would be enacted by the same process used this year: The C.B.O. and the O.M.B. will jointly estimate the reduction needed to meet the target, with half of the required cuts coming from defense spending and half coming from domestic programs.

The G.A.O. must clear the estimate or settle any dispute between the two budget offices, and the President then signs the G.A.O. report.

The new 1986 budget authority will be the starting point for next year's reductions. The directors of C.B.O. and O.M.B. said in their joint report that savings will be achieved through "permanent cancellation of new budget authority and other authority to obligate and expend funds."

More than half of the budget is exempt from Gramm-Rudman-Hollings, including Social Security, interest on the debt, veterans' compensation and pensions, and eight antipoverty programs, including the Women's, Infants, and Children (WIC) budget.

Analysts anticipate an "automatic" reduction next year of far more than 4.3 percent. The projected fiscal 1986 deficit, without the new reductions, is $220.5 billion, according to the C.B.O.-O.M.B. estimate; the latest cuts bring it to about $209 billion.

A report prepared in December by Federal Funds Information for States, which is jointly sponsored by the National Governors Association and the National Conference of State Legislatures, projected that an across-the-board reduction of between 5.5 percent and 6 percent would be required in fiscal 1987.

The constitutionality of the mechanism to enact the spending cuts, however, has been challenged in federal court here by the Reagan Administration, a group of Congressmen, the largest federal employees' union, and an organization representing retired federal employees.

The complaints contend that the law unconstitutionally breaches the separation-of-powers doctrine. All of the legal briefs question the critical role delegated by the bill to nonelected officials, such as the comptroller general, who heads the G.A.O. The comptroller general, Charles A. Bowsher, is a Presidential appointee, but the G.A.O. is a Congressional agency.

Vol. 5, Issue 19, Page 1, 11

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